Property firm warns on Brexit threat to London economy
London-focused property firm Great Portland Estates warned Thursday that the capital`s economy would suffer a "negative impact" from Brexit.
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London-focused property firm Great Portland Estates warned Thursday that the capital`s economy would suffer a "negative impact" from Brexit.
"It is likely that the uncertainty created by the EU referendum result will have a negative impact on economic growth in London," said chief executive Toby Courtauld, whose company manages a property portfolio worth £3.7 billion ($4.8 billion, 4.3 billion euros) in the capital.
"In the near-term, we expect confidence to reduce and some business investment decisions to be deferred whilst negotiations to establish our trading arrangements with the EU are undertaken."
He added in a trading update that "we can expect London`s commercial property markets to weaken during this period of uncertainty" -- during which Portland would face "reduced rental growth prospects".
Britain`s real estate market has emerged as one of the hardest hit sectors from the country`s shock June 23 referendum decision to leave the 28-nation European Union.
Three more British commercial property funds suspended trading on Wednesday on a wave of redemptions triggered by the Brexit vote, meaning six funds have now halted trade with assets totalling around £15 billion.
The Bank of England had warned Tuesday that Brexit risks to Britain`s financial stability were "crystallising" -- and cited London`s "overstretched" commercial real estate market as a cause for concern.
In the wake of the referendum, London`s upmarket estate agency Foxtons cautioned that profits would be hit this year by the surprise result.
Fears are growing that Brexit could spark a slump in the London`s property market, which has benefitted from the BoE`s record-low interest rates for more than seven years.
Prior to the referendum, there were already signs that the high-end London property market was slowing after the government hiked taxes on transactions aimed at preventing a bubble.
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